ONE of London’s top professional art investors is to set up a special fund to cash in on the bargains thrown up by the credit crunch. Philip Hoffman, chief executive of the Fine Art Fund Group, said he would raise between $50m (£33m) and $100m for an “opportunistic” investment fund.

Hoffman said he expected prices for some art categories – modern and Impressionist works in particular – to fall by as much as 30% this year. “I am now regularly being approached by wealthy individuals or family estates that are looking to sell art without the publicity of going to auction,” he said. “Unfortunately, at the moment their expectations on price are way too high.”

Evidence is mounting that after years of spectacular growth, art prices are falling. The Mei Moses index, which tracks auctions, suggests prices fell by 4.5% last year, after five years of growth averaging 20% a year. Artprice.com, which also tracks auctions, said that the proportion of works worth more than €1m (£882,000) left unsold increased sharply in the second half of last year.

Hoffman said some art owners would have to accept big losses if they needed a fast sale.

Those with sufficient accumulated wealth to escape the credit crunch were still interested in investing, though. “Some of the individuals who might co-invest with our funds have indicated they will still put in money if the price is right,” he said.

There are other indications that the luxury-goods market is flagging in the face of recession.

Business-jet travel in Europe was down around 16% in December compared with the same month last year, according to figures compiled by Eurocontrol, the pan-European air-traffic agency. There were on average 1,540 flights a day in December, 15.9% down. In July there were 2,614 flights a day, although most of the difference is accounted for by seasonality.

Traffic in America is estimated to be down by around 11%, according to a report from analysts at UBS.

Brokers say secondhand aircraft prices have fallen sharply, with a glut of aircraft on the market. The substantial premiums being paid six months ago for the early delivery of new aircraft have also largely disappeared, brokers say.

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